For years, owning a car, upgrading a smartphone or furnishing a home was largely a matter of saving until there was enough cash to make the purchase.
However, that was then because the equation is rapidly changing as lenders open up the market to finance household items that are now accounting for the largest share of loans.
Consumers across Kenya are increasingly turning to banks, SACCOs, asset financiers and digital lenders to pay for things they want — and, in some cases, things they would previously have postponed until they could afford them.
Cars are being bought on hire purchase. Phones are being paid for in instalments. Furniture, televisions, refrigerators and other household appliances are increasingly being acquired through credit.
The shift is creating a lucrative market for lenders, even as it leaves households carrying monthly obligations for years after the excitement of a new purchase has faded.
The banking industry alone had Sh943.8 billion in loans to the personal and household sector by December 2024, accounting for 23.2 per cent of gross bank loans, according to date by the Central Bank of Kenya.
The sector also had more than 10.7 million personal and household loan accounts — far more than any other sector.
While the often-cited Sh500 billion-plus figure covers a broader consumer and digital-credit ecosystem rather than one single CBK category, the direction is clear that household borrowing has become a major part of Kenya’s credit market. And behind the numbers are households making difficult calculations every month.
Rian Alivisa, a resident of Nairobi says he had to resort to his bank to finance acquisition of high home entertainment appliances. He holds that paying the full cash price upfront would have swallowed a significant portion of his savings.
Financing made the purchase appear manageable because the cost was spread over several months.
“It became another bill competing for income alongside rent, food, school fees, utilities, insurance and other household expenses,” Alivisa says.
SACCO’s have also not been left behind as some are providing asset financing facilities for up to Sh1 million for items, such as fridges, television sets, cookers and solar systems.
This is the central tension behind Kenya's consumer-credit boom: credit makes expensive goods immediately affordable, but does not necessarily make them cheaper. A phone that costs Sh100,000 in cash, for example, can feel less intimidating when presented as a monthly instalment.
The psychological difference between paying Sh100,000 today and paying several thousand shillings each month can be substantial — even where the final financed cost is considerably higher.
“I already had a working smartphone but I wanted another one that is not android that’s why I went and paid a deposit to acquire this phone. Though I sometimes fail to pay for days I just have it and resort to using my old device,” says 25-year-old Michelle Ayanzwa who recently secured a job.
The purchase has become a familiar sign of Kenya’s growing consumer credit market, where phones, cars, electronics and other lifestyle goods are increasingly being bought through loans.
Her experience highlights the growing appetite for credit to finance lifestyle purchases and the risks that come with taking on debt for items that are not necessarily essential.
Experts say consumer and asset financing can offer lenders shorter repayment periods, identifiable collateral in some cases and a regular stream of interest income.
Unlike a mortgage, which can tie up capital for many years, asset finance can generate repayments over a shorter period. The banking sector has traditionally viewed mortgages and property lending as important long-term businesses. But the property market presents lenders with longer repayment periods, larger individual exposures and collateral that can take time to liquidate when a borrower defaults.
A lender can finance a vehicle, electronics or household equipment and collect monthly repayments from the borrower. For secured asset finance, the underlying asset can also provide security for the loan. That does not eliminate the risk.
CBK data shows personal and household lending is already among the sectors with significant bad loans. At the end of 2024, personal and household loans had gross non-performing loans of Sh100.98 billion, equivalent to 14.5 percent of total banking-sector NPLs.
By December 2025, the overall banking industry's gross non-performing loans stood at Sh674.4 billion, although the NPL ratio had fallen to 15.4 per cent from 16.9 per cent three months earlier.
The risk is particularly important because household income can be highly sensitive to inflation, job losses, business downturns and unexpected expenses.
CBK's credit survey has also indicated that banks expected non-performing loans in the personal and household sector to increase, while lenders planned to intensify recovery efforts across several sectors. The consumer says the repayment has forced them to cut back on other spending.
Credit can support consumption and allow households to acquire productive assets. But when borrowing is used predominantly to bring forward consumption, it can also shift future income towards servicing today's purchases.
According to the Old Mutual Financial Wellness Monitor, there was increased borrowing to buy furniture or appliances, a cell phone, tablet or technology item. Other lifestyle borrowings that were noted were to buy a vehicle, pay for a holiday or travel and to pay for a special celebration.
According to Simon Koech a financial consultant, financial irresponsibility rarely announces itself loudly. “When spending exceeds your capacity, the consequences linger long after the ‘roses wilt.’ Once the allure of what you wanted fades that’s when the strain kicks in,” Koech says.
SACCOs, microfinance institutions, digital lenders and asset-finance companies have become important channels through which Kenyans access credit. Kenya's financial inclusion strategy notes that digital lenders and other non-bank credit providers have collectively disbursed more than Sh500 billion in loans, reaching more than eight million Kenyans, particularly individuals and small businesses.
The growth of these channels means a consumer does not necessarily have to walk into a bank branch to borrow. The consequences become stark when the income supporting the repayments disappears.
Auctioneers are increasingly handling repossession of vehicles, household goods and other assets used as security for loans from banks, SACCOs and fintech companies. What begins as a convenient monthly instalment can therefore end with a vehicle being towed away or household possessions being sold to recover a debt.
The National Association of Kenya Auctioneers (NAKA) says while the country's credit market has become more accessible than ever before, many borrowers are finding themselves under financial pressure due to rising living costs, inflation, business challenges and multiple loan obligations.
NAKA National chairman Maurice Osundwa said Kenya's debt recovery landscape is evolving alongside the country's growing financial sector.
"Credit has become an essential driver of economic growth, enabling families to invest, businesses to expand and entrepreneurs to seize new opportunities. However, borrowers must also appreciate the responsibility that comes with credit,"he said.
Early communication with lenders and proper financial planning remain the best safeguards against debt recovery, Osundwa said.
Credit remains an important tool for buying homes, vehicles, equipment and other assets that households and businesses could not acquire immediately through cash.
The experts argue out that the concern arises when the ability to borrow grows faster than the ability to repay. For banks and other lenders, consumer finance can be a profitable business.
For consumers, it can provide access to goods and assets that would otherwise remain out of reach. For households, the real cost of borrowing is not the monthly instalment displayed at the point of purchase. It is the total amount eventually paid — and what has to be sacrificed every month to make that payment.
